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Listeriosis crisis has cost Tiger Brands R1.4bn in revenue so far

2018-11-23 19:25

The listeriosis crisis cost Tiger Brands R1.4 billion in revenue during its latest financial year, the company’s chief executive, Lawrence MacDougall, said on Thursday during an interview.

The outbreak of listeriosis, which killed more than 200 people, cut the food group’s operating income profit by R425 million for the group’s financial year ended September, he added.

Tiger Brands has put the total costs, excluding operating losses relating to the recall of its value added meat products, at R430 million while insurance recoveries have been R50 million.

“We spent R70 million on refurbishing the sites – R50 million of that was already in our plan – so an incremental R20 million,” MacDougall told City Press.

According to Tiger Brands’ results presentation, the following was implemented where the listeriosis outbreak was discovered while the factories manufacturing value-added meat products were shut:

• Refurbishments and deep clean completed;

• The new plant designs now allow for easy cleaning and sanitation;

• The plants now have segregated zones with separate entrances;

• The factories require that staff do not enter the factory premises without a change in personal protective equipment as well as thorough boot and hand wash; and

• Staff members have been retrained.

Value added meat products are produced in four plants based in: Germiston, Polokwane, Pretoria and Clayville abattoir east of Midrand.

Health Minister Aaron Motsoaledi in March announced that the source of the listeriosis outbreak originated in cold-meat products manufactured at the Polokwane factory. In the wake of this, the plants were shut and the group’s ready-to-eat cold meat products to be recalled.

Nevashnee Naicker, a Tiger Brands spokesperson, said the major refurbishments were done at the Germiston and Polokwane factories.

MacDougall said that the way that the plants were structured “you have to shut down to be able to do cleaning”.

Naicker said that there plants had been subject of a weekly plant shutdown for “deep cleaning”.

“At the end of every production run, there is an extensive cleaning cycle that takes place, including the dismantling of all relevant production equipment.

"This cleaning process is further bolstered by a weekly deep clean of the facility [typically over the weekend],” she added.

MacDougall said that: “We took the opportunity while we were shut down now to create a more facilitating cleaning regime so we can get access to the insides of the machine without having to have a full shutdown for three or four weeks.

"So we can shut down in the evening, we can clean, we can do it on the weekend.

"So it facilitates a more regular cleaning regime than we might have done in the past. So we have increased those standards significantly – in terms of protection.”

On the segmentation of the factories, MacDougall said that: “We have been very clear about which areas are high care and which areas are not.

"When you bring products into the factory – obviously you are bringing in all the bacteria that would have been brought in by the elements of that product.

"As the products move through the facility – the safety and the skills set enhances so when it leaves the factory – there is nothing in the product.”

Naicker said that regarding segmentation, these plants had low, medium and high care zones for the processing of the unit’s products.

As an extra precaution, MacDougall said that the facilities have been segmented at the end of the packing line and in the intermediate packing line.

“So our high care areas now are more high care than they were before and we have extended the high care to either side of the factory.”

“To stop delinquent behaviour that might kick in over time – we have actually created physical barriers in the factory so if an individual decides to wander through the factory – he actually can’t. When he leaves, we have cameras in place that check that the people are changing their boots.”

“For instance they can’t leave the manufacturing area to go to lunch or go to the canteen – they will have to change into a full set of protection clothing when they come back into the high-care areas.

"It is similar to what you would see in on TV in a hospital operating theatre.”

MacDougall said that hygiene standards at the plants had been increased significantly.

“We have decided that our standard is that there will be zero bacteria when [food] leaves the factory… We have taken extra precautions and raised the safety standards significantly – therefore to achieve that – we put these additional precautions in place in terms of behaviour and structural changes.”

Turning to jobs, MacDougall said the Germiston plant had reopened there have been some voluntary retirements.

“We have had some restructuring but we need to get volumes up to get us back to profit.”

MacDougall said in response to a question about when the unit would get its production back to pre-listeriosis crisis levels – that this was a “really difficult question to answer”.

“The consumer research we have done is that the consumer wants to come back fairly quickly once they are satisfied with the safety protocols.”

MacDougall said that “ready to cook products”, which include bacon and frozen sausages, were again being sold again out of the Germiston factory.

The Polokwane factory has reopened its canned meat section while its “ready to eat” section, which includes polony and vienna sausages, is set to restart next month.

The Enterprise brand, which was particularly associated with polony and the listeriosis crisis, had been relaunched with new packaging.

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August 18 2019